Keynesianism and Monetary Policy: What Is It and Who Does It? - Essay Sample

Introduction

Keynes was a British economist whose ideas and notions changed the practice and principles of macroeconomics and governments' economic policies worldwide (Bartlett, 2013). On one hand, Keynesianism, also known as Keynesian economics revolves around macroeconomics theories that determine how in the short-run (particularly during a recession), economic output is strongly impacted by total spending in the economy (Bartlett, 2013).

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What is monetary policy? Who does this?

Monetary policy is the macroeconomic scheme set down by the central bank which involves the management of interest rates and financial supply (Blinder, 2012). In that perspective, monetary policy is generally used by state governments to achieve macroeconomic objectives such as growth, consumption, liquidity, and inflation (Blinder, 2012).

What is meant by "Shadow Banking" - so what - why should I care?

Shadow banking is a system that involves a group of financial intermediaries who are tasked to formulate the formulation of credit across the universal economic system (Borak, 2013). Shadow banking is something to care about because it is very significant for the economy since it provides funding to traditional banking (Borak, 2013). On the contrary, traditional banking would not be lending money, thus slowing down the broader economy.

What is retail banking? What's the problem here?

Retail banking, which is as well-referred to consumer banking, is offering banking services to retail clients instead of institutional clients, such as financial institutions, corporations, and organizations (Buffet, 2013). The problem with this form of banking is that it constitutes an ever-increasing cost in all spheres ranging from compliance to marketing (Buffet, 2013).

Given what you know about the banking and the financial sector, what do you think government policy should be?

Government policy should be structured to manage the economy for growth and stability. By this, it means that the management of the economy is made effective by having a governmental policy foundation that includes an independent central bank tasked with the responsibility to manage monetary policy (Buffet, 2013).

Given your previous answer, what do you think of this new deal?

I believe the new deal to allow millions of Americans citizens to integrate into a class-action lawsuit against the financial institution is not a good move. The reason being is that the move is aimed at harming credit unions and community banks by opening the door to lawsuits by particular interest trial lawyers (Greenberg, 2017).

References

Bartlett, B. (2013). The New York Times. Retrieved 17 March 2020, from https://economix.blogs.nytimes.com/2013/05/14/keynes-and-keynesianism/.

Blinder, A. (2012). Economics 101: Not Your Father's Monetary Policy - NYTimes.com. Nytimes.com. Retrieved 17 March 2020, from https://www.nytimes.com/roomfordebate/2012/04/01/how-to-teach-economics-after-the-financial-crisis/economics-101-not-your-fathers-monetary-policy.

Buffet, M. (2013). "What's the Future of Retail Banking?" Huffpost.com. Retrieved 17 March 2020, from https://www.huffpost.com/entry/whats-the-future-of-retai_b_3180932.

Greenberg, J. (2017). Consumer Bureau Loses Fight to Allow More Class-Action Suits. Nytimes.com. Retrieved 17 March 2020, from https://www.nytimes.com/2017/10/24/business/senate-vote-wall-street-regulation.html.